Are you a landlord considering offering month-to-month rental agreements? If so, you may be wondering if it’s the better option for you and your business. For some landlords, a month-to-month rental agreement can offer more flexibility than a traditional lease. It allows you to give tenants a shorter commitment and provides an easy way to increase rent.
That said, it is also difficult to plan for expenses. Also, your tenant may leave anytime on a short notice, which can disrupt your cash flow and require you to get the property ready for the next tenant on short notice. There are pros and cons to both month-to-month rental agreements and long-term leases.
When deciding between the two, it is important to weigh the risks. In this article, we will tell you about month-to-month lease options. We will also share tips on how to make the best use of a month-to-month lease as a landlord. First, let’s get to the basics.
What Is a Month-To-Month Lease Agreement?
Imagine having the flexibility to increase rent periodically or end a tenancy without having to go through the lengthy eviction process. That’s the beauty of a month-to-month lease.
With a month-to-month lease, you can easily adjust the rental agreement to meet your changing needs. It’s a great way to provide short-term housing without a long-term commitment.
The advantages of this type of arrangement are clear – it gives landlords the ability to lease out their property on a rolling basis. You don’t have to commit to a long-term contract or worry about unoccupied periods between tenants.
However, there are also some drawbacks too. For example, these agreements can be more expensive than traditional long-term leases. The lack of security and stability of a long-term lease can be a concern, especially when rental income is your primary source of income.
How Does a Month-To-Month Lease Work?
A month-to-month lease is a type of rental agreement that does not have a predetermined end date, and instead, is renewed monthly. Tenants typically pay rent each month and may have the option to give a 30-day notice to end the lease.
Under a month-to-month lease, the terms of the agreement don’t change month to month. The rent, the security deposit, and any other fees or rules remain the same.
- Both the landlord and tenant sign a month-to-month lease agreement. This is a legally binding document that outlines the responsibilities and expectations of both parties.
- The tenant pays rent monthly. They must give 30 days’ notice if they wish to vacate the property. The landlord also has the right to end the agreement with 30 days’ notice.
- Landlords can increase rent at short notice. It’s a great way to ensure their rental income stays up to date with market trends and the current cost of living.
Pros of a Month-To-Month Lease Agreement for Landlords
Month-to-month lease agreements offer landlords many benefits. It’s great for landlords looking for an easy way to manage their rental properties.
- Flexibility: Month-to-month leases give landlords more flexibility than traditional long-term leases. You can end the agreement at any time if you feel the tenant is not living up to their obligations.
- No long-term commitment: Unlike long-term leases, month-to-month leases do not require a long-term commitment from the landlord. You can make changes to the agreement or end it at any time without having to worry about breaking a contract.
- Ability to increase rent: You can raise rent at any time without having to worry about renewing a long-term lease. This gives you more control over your rental income and helps ensure you are getting the most out of your property.
Drawbacks of a Month-To-Month Lease Agreement for Landlords
Month-to-month lease agreements can offer landlords the flexibility to easily adjust their rental arrangements or make renovations. However, there are some potential drawbacks that you should know:
- Increased Risk of Non-Payment: The biggest downside of a month-to-month agreement is that tenants who opt for such a lease may not be financially stable.
- Short-Term Financial Loss: With a long-term agreement, landlords can plan for a steady income for a longer period. However, with month-to-month agreements, you can’t count on a steady stream of income, so there is a higher risk of a short-term financial loss.
- Higher Maintenance Cost: When you have a longer-term agreement, it’s easier to plan for maintenance. With month-to-month agreements, there’s no guarantee that you will be able to recoup the costs of the repairs.
- Difficulty Renting Out: Your tenants are less likely to renew a lease. And, you might have to struggle with higher vacancy rates. Also, if you don’t have a longer-term agreement, you may not be able to do any improvements to the property that will increase its value.
Takeaway: When to Consider a Month-To-Month Lease Agreement
A month-to-month lease isn’t a great option for every rental property owner. It might work wonders for those who are looking for short-term tenants or need more flexibility when it comes to managing their rental properties. However, it’s important to consider the potential risks, such as higher vacancy rates.
Here’s when to consider a month-to-month lease agreement
- When you are looking for short-term tenants.
- When you need more flexibility in managing your rental properties.
- When you are in a high turnover area and need to quickly fill vacancies.
- When you are looking for tenants who won’t commit to a long-term lease.
- When you are looking to maximize your rental income by charging higher rent on a month-to-month basis.
Here’s when NOT to consider a month-to-month lease agreement
- When you need a longer-term tenant to guarantee consistent rental income.
- When you need the tenant to make a larger financial commitment.
- When you need the tenant to agree to specific rules and regulations.
- When you need the tenant to make long-term improvements to the rental property.
- When you need to protect yourself from a tenant who might not pay rent or cause damage to the property.
Bottom Line
A month-to-month lease agreement can be beneficial for landlords in certain situations. For instance, you can sign a month-to-month lease when you are planning to sell your property. A long term lease offers benefits as well. It’s important to choose what is best for you and your property.
Ultimately, the decision of whether to use a month-to-month lease should be made based on the landlord’s individual circumstances. Want an expert to help you decide? You can always reach out to Florida Property Management & Sales.
We can help with all aspects of property management, from advertising your property to tenant evictions and everything in between.